Egypt and China signed three Memoranda of Understanding (MoUs) to promote trade in local currencies, bypassing the U.S. dollar.
These agreements, signed at the Central Bank of Egypt’s headquarters, aim to deepen financial cooperation and reduce reliance on dollar-based channels.
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The first MoU, involving Suez Canal Bank, China-Africa TEDA Investment Company, and CIPS Company Limited (operator of China’s Cross-border Interbank Payment System), facilitates trade settlements in Chinese Yuan within the China-Egypt Suez Economic Trade Cooperation Zone, cutting third-party settlement costs.
A second agreement between UnionPay International and the Egyptian Banks Company for Technological Advancement (EBC) expands UnionPay’s integration into Egypt’s digital payments ecosystem, enhancing its acceptance at point-of-sale and online platforms.
A third MoU supports broader cooperation in digital payments infrastructure and central bank digital currencies (CBDCs).
The agreements is in the right direction with China’s Belt and Road Initiative and Egypt’s Vision 2030, strengthening economic ties.
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Benefits for Egypt include lower transaction costs, increased trade with China (its largest import partner), and enhanced financial sovereignty.
However, this move challenges the U.S. dollar’s dominance in global trade, potentially reducing the role of U.S. correspondent banks and their fee revenues.